WEBVTT - Explosive Growth in Japan Shareholder Activism

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<v Speaker 1>You're listening to Asia Centric from Bloomberg Intelligence, the podcast

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<v Speaker 1>that pulls back the curtain on global business so you

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<v Speaker 1>can invest better across the Asia Pacific rim. I'm John

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<v Speaker 1>Lee in Hong Kong. Shareholder activism is gaining traction in Japan.

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<v Speaker 1>The number of new activist campaigns surged seventy percent year

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<v Speaker 1>on year to over one hundred in the first half

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<v Speaker 1>of this year, marking the biggest increase out of any

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<v Speaker 1>major market in the world. Meanwhile, a number of new,

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<v Speaker 1>homegrown activist funds are becoming more prominent in Japan's corporate circles.

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<v Speaker 1>What's driving the growth in shareholder activism in Japan? Is

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<v Speaker 1>Japanese corporate culture finally changing? And how do Japan's new

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<v Speaker 1>activist funds differ from their famous US counterparts? By Elliott

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<v Speaker 1>Advisors and Bill Ackman. Here to discuss Japan's push for

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<v Speaker 1>corporate governance and shareholder activism is Shuhei for Kawa, Managing

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<v Speaker 1>director and portfolio manager at Misaki Capitol, and James Hahn,

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<v Speaker 1>managing partner at Prodigies Group focused on local activism. Welcome

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<v Speaker 1>Shoehy and James Hi.

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<v Speaker 2>John, I'm great to be here.

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<v Speaker 3>Thanks for having.

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<v Speaker 1>US shoe Hey, I wanted to ask, are we in

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<v Speaker 1>a golden period of shareholder activism in Japan?

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<v Speaker 3>Yeah?

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<v Speaker 4>I think this is one of the start points of

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<v Speaker 4>the golden period of shareholder activists in Japan. The US

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<v Speaker 4>experienced the same things in the late nineteen eighties, and

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<v Speaker 4>I believe this is just a start compared to the

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<v Speaker 4>US now, Jeffan's average portion of the low pbo vo

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<v Speaker 4>one company is about fifty percent. Same things happen in

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<v Speaker 4>the US in the ninety eighties. There are some structure

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<v Speaker 4>change in the US. It takes twenty years or thirty

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<v Speaker 4>years to change the corporate god in one country, and

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<v Speaker 4>they are compared to the US. I think Japan is

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<v Speaker 4>just a start point of a reform of a corporate governance,

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<v Speaker 4>and the develotop of the change of corporate governance in

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<v Speaker 4>the decent years is a huge I think this is

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<v Speaker 4>still slow, but this is a good timing to entry

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<v Speaker 4>to this market.

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<v Speaker 1>And James, you've been working in the Japan activist scene

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<v Speaker 1>for quite a number of years, over a decade. What's

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<v Speaker 1>been the major driving force of the rise of shareholder

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<v Speaker 1>activism in Japan? Has it been the corporate governance code

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<v Speaker 1>or did it start before then?

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<v Speaker 5>I think the simple answer is it's definitely been government

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<v Speaker 5>policy led the introduction of the Corporate Governance Code.

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<v Speaker 3>The stewardship codes. These are all.

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<v Speaker 5>Sticks and carrots introduced by the government in the FSA.

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<v Speaker 5>I mean, there are other environmental regions behind us, but

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<v Speaker 5>I mean it's definitely it's been a government led process.

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<v Speaker 3>So, and it's been around for quite a while, okay.

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<v Speaker 1>And when the public thinks of shareholder activism, they often

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<v Speaker 1>think of the US activists, the famous ones like kark On,

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<v Speaker 1>Bill Ackman, Elliott Advisors, which is actually taking on one

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<v Speaker 1>of the Japan's biggest corporate soft bank. They often attack

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<v Speaker 1>corporate boards, sometimes they attack governments. How are japan local

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<v Speaker 1>activist funds different from say, these famous US activists.

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<v Speaker 4>I think whether the approach is Hohl foundational or constructive

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<v Speaker 4>is not nedated to the nationality. It's the matter with

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<v Speaker 4>the fund staff. However, as a local activist fund, we

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<v Speaker 4>understand how the unique culture of a Japanese company influences

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<v Speaker 4>their digital make it so the strength of local activist

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<v Speaker 4>fund lies and diabeity to emphasize what the management is

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<v Speaker 4>struggling with and why they may not be making a

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<v Speaker 4>light Jim.

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<v Speaker 6>And James, did you want to on that as well.

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<v Speaker 3>Yeah, two comments.

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<v Speaker 5>The first is that the one way that the locals

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<v Speaker 5>are different is they tend to be more constructive.

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<v Speaker 3>You know, carrots rather than sticks. And if you look.

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<v Speaker 5>At the now what twelve years or so history of

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<v Speaker 5>this sort of development, a lot of people don't realize

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<v Speaker 5>is that a lot of the engagement carrot driven approach,

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<v Speaker 5>it's actually had a better track record, at least in

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<v Speaker 5>the first half.

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<v Speaker 3>And I think that's something that's kind of people overlook.

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<v Speaker 5>I mean, I think the second thing is that I

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<v Speaker 5>think a lot of people don't realize this, but now

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<v Speaker 5>Japan is the second most active in terms of industor

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<v Speaker 5>proposals in the world.

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<v Speaker 3>I mean, careas number three. Everyone knows us is number one,

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<v Speaker 3>but I mean there's quite a lot of activity here.

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<v Speaker 1>And you mentioned the carrot approach for local activist funds.

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<v Speaker 1>Do you feel that, you know, Japanese corporate boards are

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<v Speaker 1>more receptive to local activists such as yourself versus the

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<v Speaker 1>Globe blacktivists.

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<v Speaker 4>I believed the company I'm more willing to accept the

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<v Speaker 4>activists who take a construct approach, and that in case

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<v Speaker 4>of Misaki, they're even inbound a query from the company,

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<v Speaker 4>meaning that the company came to Misaki and ask investment

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<v Speaker 4>a device.

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<v Speaker 1>Okay, so companies are now approaching you to improve the

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<v Speaker 1>corporate strategy and the shareholder return strategy.

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<v Speaker 7>Yeah, we are.

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<v Speaker 4>Often asked to make our presentation at the board medium

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<v Speaker 4>in Japan, the CEO often has an opportunity to meet

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<v Speaker 4>with the investor and the field pressure, but other board

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<v Speaker 4>member may not share this, So SHEO want to use

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<v Speaker 4>the voice of shareholder to push his default in the board.

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<v Speaker 1>what you hear, don't forget to subscribe and chair James,

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<v Speaker 1>you've been in Japan.

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<v Speaker 6>For over a decade.

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<v Speaker 1>When you first got to Japan, what was the corporate

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<v Speaker 1>culture and how much has it changed from now?

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<v Speaker 5>You know, I think the commentary that I used to

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<v Speaker 5>hear is yeah, there certainly is change, but it's just

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<v Speaker 5>happening so slow in Japan that that's been the frustration

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<v Speaker 5>of a lot of Western industors. I think that that

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<v Speaker 5>narrative has changed in the last few years. It's not

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<v Speaker 5>a question of if, it's a question of how it's changing.

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<v Speaker 5>I mean, if you look at the number of local activists,

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<v Speaker 5>it was just a handful about maybe four or five

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<v Speaker 5>about a decade or twelve years ago. Now antadotally we're

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<v Speaker 5>hearing sort of like fifty sixty.

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<v Speaker 7>That's a big increase in terms of number of asset managers.

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<v Speaker 5>As shoe A just mentioned, the amount sheer amount of

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<v Speaker 5>inbounds that he's getting, you know, instead of him knocking

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<v Speaker 5>on the doors of these Japanese corporates. It's pretty stunning.

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<v Speaker 5>I mean, I think the bigger issue is not so

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<v Speaker 5>much these inbounds. You know, guys like Chouei, they have

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<v Speaker 5>this unique interaction with the corporates. I think what's really

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<v Speaker 5>important is how Shue is allocating his time. Because he

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<v Speaker 5>has such a great relationship, he has to monetize that

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<v Speaker 5>in terms of ROI and.

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<v Speaker 7>How much time I spend with his company.

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<v Speaker 5>You know, at the end of the day, we are

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<v Speaker 5>investors here, right and we're not just crusaders, and that's

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<v Speaker 5>probably the big change with a lot of these engagement managers.

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<v Speaker 1>And James Hono, you used to work on Wall Street

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<v Speaker 1>for many years, used to work at a hedge fund

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<v Speaker 1>in New York City before you moved to Japan. How

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<v Speaker 1>would you describe a Japan's local activist industry?

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<v Speaker 3>Like?

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<v Speaker 1>Are we still in the early stages? So we may be,

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<v Speaker 1>is it mature?

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<v Speaker 6>Give us some examples.

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<v Speaker 5>I think if you use a really blunt metric like,

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<v Speaker 5>for instance, number of external board directors, right, and use

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<v Speaker 5>a US baseball analogy of how many external board directors

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<v Speaker 5>you have in Japan compared to the rest of the world,

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<v Speaker 5>I mean you could say sort of Japan's in the

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<v Speaker 5>maybe fourth inna Europe and maybe other places.

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<v Speaker 7>In Hong Kong elsewhere, maybe it's sort of in the

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<v Speaker 7>fifth or.

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<v Speaker 5>Sixth inning and the US with you know here number

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<v Speaker 5>of external board directors. I mean, there's other metrics, but

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<v Speaker 5>that indicates that there's a lot more to go. Another

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<v Speaker 5>metric is if you look at valuations priced the book

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<v Speaker 5>versus roe, we're still well behind that, you know, in

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<v Speaker 5>Europe and the US, and so we're definitely the earlier

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<v Speaker 5>stages there. I think the final thing that I'll say though,

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<v Speaker 5>is if you look, however, at what the activists will do,

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<v Speaker 5>and most international activists will focus on capital Mana has

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<v Speaker 5>the balance sheet and the academic research that Misaki had

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<v Speaker 5>done that sort of played out. You're starting to see

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<v Speaker 5>a lot of crowded traits where activists are kind of

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<v Speaker 5>running into each other in their portfolio. You don't see

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<v Speaker 5>that with Misaki. I think Tsaki's view is there's a

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<v Speaker 5>bigger story going on here. I think the story that

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<v Speaker 5>people think about is, well, this is sort of played

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<v Speaker 5>out and am I too late? And I think the

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<v Speaker 5>bigger story is the area that Misaki is focused on.

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<v Speaker 5>This is a much much bigger part of the market,

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<v Speaker 5>and they're not seeing any sort of budding heads with

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<v Speaker 5>other managers in that space. You know, a lot of

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<v Speaker 5>people don't realize this, but there are more small midcaps

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<v Speaker 5>listed in Japan than even in the US. There's just

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<v Speaker 5>such a huge part of the market. People don't realize.

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<v Speaker 1>That, and it's quite well known that a lot of

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<v Speaker 1>the MidCap space in Japan is really under research.

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<v Speaker 6>They don't have broke re coverage. Is that correct?

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<v Speaker 4>Yeah, that's correct. Yeah, eight hundred listed is stuck in Japan.

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<v Speaker 4>Five hundred or six hundred names are covered by analysis.

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<v Speaker 1>Okay, so if you roll up your sleeves and do

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<v Speaker 1>some fundamental analysis, you can find a lot of opportunities.

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<v Speaker 2>You're saying, Yeah, I think so.

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<v Speaker 4>And the most of the company are undervalued because of

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<v Speaker 4>they are now coverage by analysis. So yeah, they're a

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<v Speaker 4>huge upside for ir impillment as well.

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<v Speaker 1>That's quite interesting because in the last couple of years,

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<v Speaker 1>the NICKET two to five, you know, before the recent correction,

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<v Speaker 1>has been one of the best performing indices around the world.

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<v Speaker 1>It receives a lot of foreign investment. So you're basically

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<v Speaker 1>saying the story is that a lot of foreigns were

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<v Speaker 1>just looking at that large cap space and not in

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<v Speaker 1>the mid caps.

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<v Speaker 2>Yeah, but I think this is huguely due to the

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<v Speaker 2>week am.

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<v Speaker 4>So we can contribute the profits of a large cab

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<v Speaker 4>company because they have a huge exporter to the foreign businesses.

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<v Speaker 1>Okay, and the James look, I see you as a

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<v Speaker 1>bridge between the local activists as well as like a

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<v Speaker 1>lot of global investors. What if far investors often get

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<v Speaker 1>wrong about Japan.

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<v Speaker 5>I think that what they used to get right. Is

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<v Speaker 5>the culture of equity, the structural changes it was is

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<v Speaker 5>coming at such incremental stages that they always saw this

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<v Speaker 5>as a trading market.

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<v Speaker 7>There's no structural multi year opportunity.

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<v Speaker 3>I think that's changed.

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<v Speaker 5>I think to your earlier question about the blue chip

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<v Speaker 5>names that are focused by most international investors, that's done

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<v Speaker 5>very well because of this now change in mindset. And

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<v Speaker 5>I think that with the crash in the currency in Japan, yeah,

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<v Speaker 5>it's been the large corporates that have really benefited. So

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<v Speaker 5>all together, blue chips have done really well in Japan.

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<v Speaker 5>I think while that's important, again, it's actually the small

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<v Speaker 5>medium size segment that's a much bigger part of the market.

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<v Speaker 5>And if you look at the last few Michaels when

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<v Speaker 5>we had a bear market, I think this is something

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<v Speaker 5>that a lot of people get wrong, is when you

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<v Speaker 5>have a bear market, most small midcaps in Asia, they

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<v Speaker 5>just get slaughtered, you know, irrespective it's just a beta trade.

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<v Speaker 5>Japan is different. You can see some amazing share price

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<v Speaker 5>dispersion with small midcaps in Japan in a bear market,

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<v Speaker 5>which you don't see in Asia ex Japan, and I

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<v Speaker 5>think it's a little bit like GMO in the Boston,

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<v Speaker 5>they were making the comment that small mid caps sort

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<v Speaker 5>of island of value in a crazy insane valuations. I

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<v Speaker 5>think it's an interesting area that they're definitely getting that wrong.

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<v Speaker 6>In Suwae, did you want to add more to them?

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<v Speaker 3>Oh?

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<v Speaker 2>Yeah.

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<v Speaker 4>In that country than Japan, it is assumed that the

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<v Speaker 4>bothom that effort, the CEO has a physiciality to the

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<v Speaker 4>chef order. On the other hand, in Japanese company, it

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<v Speaker 4>is common that someone who have grown within the company,

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<v Speaker 4>often selected as CEO and CEO tell us them more

0:12:57.000 --> 0:13:01.880
<v Speaker 4>care about the carriage and the employee shareholder, and they

0:13:02.080 --> 0:13:05.840
<v Speaker 4>may not necessarily feel the fetish idity toward the shareholder.

0:13:06.120 --> 0:13:09.640
<v Speaker 4>So it is the timing for activists to change the

0:13:09.679 --> 0:13:12.920
<v Speaker 4>company management through the hot fire approach.

0:13:13.840 --> 0:13:17.240
<v Speaker 2>Yeah, I did. This is a most different aspect in

0:13:17.640 --> 0:13:18.480
<v Speaker 2>Japanese market.

0:13:19.520 --> 0:13:19.880
<v Speaker 6>Okay.

0:13:20.520 --> 0:13:23.439
<v Speaker 1>And at the beginning of our discussion, James, you mentioned

0:13:23.440 --> 0:13:28.199
<v Speaker 1>that a major feature of Japan's push for shareholder activism

0:13:28.400 --> 0:13:32.000
<v Speaker 1>has been the corporate governance Code has been the government

0:13:32.240 --> 0:13:36.720
<v Speaker 1>led policies. Can you basically summarize what the corporate governance

0:13:36.840 --> 0:13:39.240
<v Speaker 1>code is for? You know, some of the listeners who

0:13:39.280 --> 0:13:40.880
<v Speaker 1>are not experts on Japan.

0:13:41.800 --> 0:13:47.319
<v Speaker 5>If I were to oversimplify, Essentially, it's uh, sticks and

0:13:47.440 --> 0:13:53.200
<v Speaker 5>carrots for minority shareholders in these listed companies because Japan

0:13:53.360 --> 0:13:56.040
<v Speaker 5>is treating this Japan discount, the price of the book

0:13:56.160 --> 0:13:59.280
<v Speaker 5>is so much cheaper. You know, one big reason is

0:13:59.320 --> 0:14:03.440
<v Speaker 5>because minority shareholders their interests.

0:14:02.920 --> 0:14:04.160
<v Speaker 3>Are not aligned.

0:14:04.559 --> 0:14:08.520
<v Speaker 5>And I think that whether you have policy changes that

0:14:08.720 --> 0:14:12.520
<v Speaker 5>encourage us, let's say, greater dividends or greater focus on

0:14:12.720 --> 0:14:18.240
<v Speaker 5>roe or sticks that kind of give these activist managers

0:14:18.280 --> 0:14:22.120
<v Speaker 5>more sticks or other minority shareholders to raise their voice

0:14:22.280 --> 0:14:26.880
<v Speaker 5>for change. Certainly a lot of these sticks, for instance,

0:14:27.360 --> 0:14:29.680
<v Speaker 5>you could not really use a lot of these sticks

0:14:29.720 --> 0:14:33.480
<v Speaker 5>in the early stages of this evolution, and I think

0:14:33.480 --> 0:14:36.920
<v Speaker 5>that's why the activists they actually did not do very

0:14:36.920 --> 0:14:39.760
<v Speaker 5>well in the first half. But that's changed quite a bit,

0:14:40.120 --> 0:14:42.400
<v Speaker 5>and now the narrative is sort of what part of

0:14:42.440 --> 0:14:46.680
<v Speaker 5>the market small MidCap engagement versus activism. But you know,

0:14:46.720 --> 0:14:51.040
<v Speaker 5>it's essentially it addresses this Japan discount. And as we

0:14:51.400 --> 0:14:53.640
<v Speaker 5>you and I John, we are both in Asia during

0:14:53.640 --> 0:14:57.360
<v Speaker 5>the ancient financial crisis. Essentially the problem of any financial

0:14:57.400 --> 0:15:01.200
<v Speaker 5>crisis is the inefficient allocation of credit, right, you know,

0:15:01.320 --> 0:15:05.600
<v Speaker 5>loans or money going into low Roe or ro I

0:15:05.680 --> 0:15:09.040
<v Speaker 5>c type businesses and that's what kept Japan down. Then

0:15:09.160 --> 0:15:12.720
<v Speaker 5>hopefully this is what's going to create some improvements.

0:15:13.280 --> 0:15:16.960
<v Speaker 1>And sure, I have to ask Japan it is changing,

0:15:17.000 --> 0:15:19.640
<v Speaker 1>but what's the pace is it? Are we seeing a

0:15:19.640 --> 0:15:21.560
<v Speaker 1>big revolution or do you think this is more of a

0:15:21.600 --> 0:15:25.760
<v Speaker 1>slow evolution in terms of corporate culture, corporates acting in

0:15:25.800 --> 0:15:30.960
<v Speaker 1>the best interest of shareholders, female board representation, just describe

0:15:31.080 --> 0:15:32.200
<v Speaker 1>the pace of change.

0:15:33.080 --> 0:15:35.600
<v Speaker 2>I think this is very slow movements.

0:15:36.280 --> 0:15:40.160
<v Speaker 4>And I think the more the corporate executive open to

0:15:40.200 --> 0:15:44.800
<v Speaker 4>the data with sharp order, but still the most of

0:15:44.800 --> 0:15:47.760
<v Speaker 4>the company I know, I think the management don't want

0:15:47.840 --> 0:15:50.080
<v Speaker 4>the data with the activists indeed.

0:15:51.200 --> 0:15:55.240
<v Speaker 1>Okay, so Japan's changing, but it's still at a more

0:15:55.240 --> 0:15:56.720
<v Speaker 1>of an evolution than a revolution.

0:15:57.920 --> 0:16:03.040
<v Speaker 4>Yeah, and that this is for Japanese activists market, so

0:16:03.520 --> 0:16:08.600
<v Speaker 4>their future potential for improving their management and enhancing their

0:16:08.600 --> 0:16:09.520
<v Speaker 4>corporate value.

0:16:10.520 --> 0:16:14.000
<v Speaker 1>And James, look, some other Asian countries are looking at

0:16:14.080 --> 0:16:18.200
<v Speaker 1>Japan's corporate governance code. They've seen the success of how

0:16:18.240 --> 0:16:20.560
<v Speaker 1>it's brought in a lot of global investors and they're

0:16:20.560 --> 0:16:23.760
<v Speaker 1>trying to replicate it. Now I'm talking about Korea and

0:16:23.840 --> 0:16:25.280
<v Speaker 1>also China.

0:16:25.560 --> 0:16:28.040
<v Speaker 6>What's your take. Do you think these.

0:16:28.280 --> 0:16:31.920
<v Speaker 1>Countries can replicate Japan's success?

0:16:32.440 --> 0:16:35.600
<v Speaker 5>I mean absolutely, and I think that the starting point

0:16:35.600 --> 0:16:39.120
<v Speaker 5>obviously is the low price to book valuations and the

0:16:39.160 --> 0:16:42.200
<v Speaker 5>low ROS related to that. But I think there are

0:16:42.200 --> 0:16:45.560
<v Speaker 5>two key elements here. I think one is the most important.

0:16:45.560 --> 0:16:49.920
<v Speaker 5>As I mentioned before, the changes have been driven by

0:16:49.960 --> 0:16:53.280
<v Speaker 5>the government in Japan policy, you know, the stewardship and

0:16:53.720 --> 0:16:57.600
<v Speaker 5>corporate governance codes. I'm aware of the copying.

0:16:57.200 --> 0:16:59.920
<v Speaker 7>And pasting by the FSA.

0:17:00.040 --> 0:17:02.880
<v Speaker 5>Odes here and you know, bringing that over to Korea,

0:17:03.560 --> 0:17:06.879
<v Speaker 5>you know, and they adjusted it accordingly in Korea. But

0:17:07.480 --> 0:17:11.399
<v Speaker 5>there has been that trend from Japan elsewhere, you know,

0:17:11.480 --> 0:17:14.120
<v Speaker 5>places like Korea. But I think there's another element here,

0:17:14.160 --> 0:17:18.639
<v Speaker 5>and that is one kind of common feature of the

0:17:18.760 --> 0:17:23.480
<v Speaker 5>terrible corporate governance is related to inherence tax. Japan and Korea,

0:17:23.760 --> 0:17:26.320
<v Speaker 5>for instance, you know, one of the highest inherence tax

0:17:26.520 --> 0:17:29.320
<v Speaker 5>in the world. I think this in particular is a

0:17:29.359 --> 0:17:30.720
<v Speaker 5>bigger issue in Korea.

0:17:30.440 --> 0:17:32.359
<v Speaker 7>Though, and the reason is that you look at the

0:17:32.359 --> 0:17:36.320
<v Speaker 7>listed companies in Korea, there's a lot more family.

0:17:35.960 --> 0:17:39.080
<v Speaker 5>Owned business there than Japan. And on top of that,

0:17:39.480 --> 0:17:43.080
<v Speaker 5>the inheritance tax rate is even higher in Korea than Japan.

0:17:43.560 --> 0:17:47.480
<v Speaker 5>What that basically means is that this is even a

0:17:47.520 --> 0:17:51.159
<v Speaker 5>bigger issue in Korea. And I think that it's a

0:17:51.200 --> 0:17:55.000
<v Speaker 5>bigger wall for activists to use sticks because if it's

0:17:55.000 --> 0:17:57.080
<v Speaker 5>a family owned businesses, they have a much bigger stake

0:17:57.160 --> 0:17:58.800
<v Speaker 5>in the companies. And so if you're going to fight

0:17:58.840 --> 0:18:02.239
<v Speaker 5>with activists, different kind of fight than in Japan. On

0:18:02.280 --> 0:18:05.960
<v Speaker 5>the other hand, if somebody can kind of solve this

0:18:06.119 --> 0:18:06.840
<v Speaker 5>issue and.

0:18:06.960 --> 0:18:07.800
<v Speaker 3>Work around us.

0:18:08.400 --> 0:18:10.360
<v Speaker 5>And I think one last comment to make is that

0:18:11.160 --> 0:18:14.040
<v Speaker 5>one difference in other places like Korea, though, is even

0:18:14.080 --> 0:18:16.560
<v Speaker 5>if the government did a U turn and said just kidding,

0:18:16.840 --> 0:18:20.679
<v Speaker 5>we're not really serious about this, corporate governance changed. The

0:18:20.760 --> 0:18:23.080
<v Speaker 5>fact is is that a lot of the owners of

0:18:23.160 --> 0:18:27.440
<v Speaker 5>these corporates in Korea, they're actually dying out post Korean

0:18:27.560 --> 0:18:32.119
<v Speaker 5>War with similar histories, and so it's creating this opportunity

0:18:32.280 --> 0:18:35.000
<v Speaker 5>right now. Even if the government did a U turn,

0:18:35.440 --> 0:18:36.600
<v Speaker 5>there will be change.

0:18:37.960 --> 0:18:40.399
<v Speaker 1>And James, before I let you co, you and I

0:18:40.440 --> 0:18:42.960
<v Speaker 1>had a discussion. Now when you move from Wall Street

0:18:43.119 --> 0:18:48.119
<v Speaker 1>to Japan. You mentioned the extremely low number of asset

0:18:48.200 --> 0:18:52.320
<v Speaker 1>managers in Japan. Can you just tell the listener like

0:18:52.400 --> 0:18:55.840
<v Speaker 1>your experience moving over from Wall Street to Tokyo.

0:18:56.840 --> 0:19:01.360
<v Speaker 5>Yeah, I remember I was invited to a conference in Tokyo.

0:19:01.480 --> 0:19:05.359
<v Speaker 5>This was maybe just roughly maybe about seven years ago

0:19:05.560 --> 0:19:08.200
<v Speaker 5>or so. I think it was jiam. It was a

0:19:08.240 --> 0:19:11.360
<v Speaker 5>government body to promote the asset manager and finance industry

0:19:11.400 --> 0:19:15.000
<v Speaker 5>in Japan, and they had invited some big global institution

0:19:15.040 --> 0:19:18.560
<v Speaker 5>on LP investors and to ask questions how do we

0:19:18.640 --> 0:19:21.200
<v Speaker 5>promote the financial industry in Japan?

0:19:21.840 --> 0:19:23.800
<v Speaker 3>And I was kind of stunned.

0:19:23.880 --> 0:19:26.120
<v Speaker 5>I was thinking, like, wow, and these are big global

0:19:26.160 --> 0:19:29.080
<v Speaker 5>institution and LP investors. Why are you going all the

0:19:29.119 --> 0:19:31.600
<v Speaker 5>way to Japan to try to help these guys. I

0:19:31.680 --> 0:19:33.760
<v Speaker 5>wanted to understand what the context, you know, what is

0:19:33.800 --> 0:19:37.000
<v Speaker 5>this event? And they were saying to me that they're

0:19:37.040 --> 0:19:40.680
<v Speaker 5>looking for more allocations to Japan, but they just could

0:19:40.680 --> 0:19:45.560
<v Speaker 5>not find enough japan asset managers. And the numbers ancdotally

0:19:45.640 --> 0:19:48.000
<v Speaker 5>that they had told me was if you take out

0:19:48.080 --> 0:19:52.280
<v Speaker 5>the bally Asthnes the millennium, these sort of like platforms

0:19:52.320 --> 0:19:55.640
<v Speaker 5>that basically take a lot of people single managers or

0:19:55.760 --> 0:19:59.960
<v Speaker 5>ex prop desk people in terms of just standalone ACID

0:20:00.080 --> 0:20:04.359
<v Speaker 5>management firms, in terms of local managers that they can

0:20:04.480 --> 0:20:07.239
<v Speaker 5>interact with on an institutional level. The numbers that they

0:20:07.280 --> 0:20:11.000
<v Speaker 5>told me were something like forty or so in the

0:20:11.040 --> 0:20:14.879
<v Speaker 5>whole country, and you could find that many number of managers,

0:20:15.200 --> 0:20:18.440
<v Speaker 5>maybe find two hundred and three hundred in places like Korea,

0:20:18.680 --> 0:20:21.960
<v Speaker 5>or much bigger number in Hong Kong, Singapore. You could

0:20:22.000 --> 0:20:25.359
<v Speaker 5>find that many number on one street in New York City,

0:20:25.480 --> 0:20:28.920
<v Speaker 5>and that was the case about six seven years ago.

0:20:29.200 --> 0:20:31.399
<v Speaker 5>I think we've seen a huge increase in terms of

0:20:31.480 --> 0:20:34.159
<v Speaker 5>number of managers. But as Shoe mentioned, for example, this

0:20:34.320 --> 0:20:37.320
<v Speaker 5>small MidCap space, there's just so many and they're just

0:20:37.359 --> 0:20:40.680
<v Speaker 5>not enough managers to look at this space. So it's

0:20:40.680 --> 0:20:43.040
<v Speaker 5>a pretty unusual situation in Japan.

0:20:43.680 --> 0:20:48.760
<v Speaker 1>Well, so entrepreneurism is returning back to Japan. It's been

0:20:48.760 --> 0:20:52.840
<v Speaker 1>an intriguing discussion on Japan. It's pushed for corporate governance

0:20:52.920 --> 0:20:57.480
<v Speaker 1>reforms and the rise of local shareholder activism. Thanks for

0:20:57.600 --> 0:20:59.240
<v Speaker 1>joining the shows, Shoeheye and.

0:20:59.320 --> 0:21:01.720
<v Speaker 3>James, Thank you for me, Thank you for having us.

0:21:02.359 --> 0:21:05.200
<v Speaker 1>This podcast was produced by Clara Chan and you've been

0:21:05.240 --> 0:21:07.359
<v Speaker 1>listening to the Asia Centric podcast